FCA Retaliation Claims: Employer ‘To Dos’ in the Critical Hours After a Hotline Call

Takeaways

• The risk of FCA retaliation complaint is rising as courts broadly interpret protected activity (including internal complaints), heightening employer exposure and underscoring the need for strong compliance and anti-retaliation programs.
• The first 72 hours after a complaint are critical. Employers should separate investigations from employment decisions, assign roles early, preserve evidence, and assess timing and comparators to reduce litigation risk.
• Recent case law reinforces the importance of complaints signaling potential fraud on the government to qualify for FCA protection, providing a key defense for employers.

Related link

• Lewis v. AbbVie Inc.

Article

Employers are seeing an increase in False Claims Act (FCA) retaliation claims stemming from what claimants often characterize as adverse action because of purported whistleblowing. In many cases, these actions are taken as a result of non-discriminatory business decisions.

The FCA is the federal government’s primary civil enforcement tool for combating fraud, imposing liability on any person who knowingly submits, or causes the submission of, a false or fraudulent claim for payment to the government.

The risk of FCA retaliation claims continues to increase, driven by a rise in the number of claims and the size of recoveries. The Department of Justice reported that in the fiscal year ending Sept. 30, 2025, FCA settlements and judgments totaled approximately $6.8 billion, with the healthcare sector accounting for $5.7 billion of the activity. This is due in part to several factors, including: (1) expansion of protected activity as courts have broadly interpreted 31 U.S.C. § 3730(h), especially in the context of “efforts to stop” claims, to encompass a wide range of internal reporting and compliance-related conduct; (2) the statute’s open-ended “efforts to stop” invites more expansive interpretation and can create increased uncertainty for employers; and (3) the expectation that employers maintain effective compliance programs that include risk-based training, internal reporting mechanisms, and robust anti-retaliation protections.

Practical Prevention

In practice, employers should:

• Tailor training to high-risk areas, especially where misconduct has previously occurred;
• Provide clear, accessible (and preferably anonymous) reporting channels; and
• Demonstrate a strong commitment to investigating complaints and preventing retaliation.

The First 72 Hours After Receiving a Complaint

An employer’s initial response to an internal complaint can be outcome-determinative in later litigation. Critical steps to take after receiving a complaint:

1. Separate Complaint Review from Employment Decisions
   Isolate the investigation from any ongoing performance or disciplinary processes. Where performance concerns predate the complaint, preserve that documentation. When feasible, separate the personnel evaluating the complaint from those making employment decisions. 
    
2. Assign Roles Early
   Clearly define the roles of legal, human resources, and compliance functions at the outset. Consider early whether to structure the investigation to preserve attorney-client privilege.
    
3. Preserve Key Evidence
   Immediately secure relevant documents, including prior performance reviews, reporting histories, and internal communications.
    
4. Pressure-Test Timing and Comparators
   Critically assess whether the same employment action would have been taken on the same timeline absent the complaint. Comparator analysis is essential.

Recent Case Law

Recent appellate and district court decisions continue to redefine FCA retaliation claims, particularly with respect to protected activity, employer notice, and pretext. Several themes have emerged: (1) courts continue to apply traditional burden-shifting frameworks; (2) notice remains a critical gatekeeping issue; and (3) employers face meaningful risk where internal complaints escalate or are coupled with inconsistent employment actions.

A recent case from the U.S. Court of Appeals for the Seventh Circuit is instructive of the importance of the notice requirement.

The Continued Importance of a Clear Fraud Nexus for Notice

In Lewis v. AbbVie Inc., No. 24-3121 (Sept. 3, 2025), the Seventh Circuit defined one of the mainstays for potential defenses: The complaint must have a nexus to potential fraud on the government.

As background, claimant Jeffrey Lewis, a pharmaceutical sales representative, raised concerns internally about off-label marketing of a drug, describing the issue in terms of “noncompliance” and violations of “corporate policy.” He did not frame his concerns as relating to fraud on the government or improper claims for reimbursement, however. After alleging adverse actions, including denial of a promotion, he brought an FCA retaliation claim.

The Seventh Circuit affirmed dismissal of the claim, with prejudice, holding that complaints framed solely as regulatory or policy violations do not put an employer on notice of FCA-protected activity. Without that notice, an employer cannot be liable for retaliation under the statute, the court emphasized.

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Because courts continue to define defenses available under the FCA, please reach out to a Jackson Lewis attorney to discuss potential defenses.